 Hi, my name is Leon Rowe currency trader and trading coach at trading 180.com and welcome to this week's supply and demand Forex and gold fundamental and technical analysis if you're a new watcher a warm welcome to you And if you're returning an equally warm welcome to you and please don't forget to like subscribe and Share press that like button if you find the content I provide useful every week And liking is a free way to support the channel and really gets it going in the YouTube algorithm. So The trading 180 process slightly different I guess to many other trading channels that we employ Fundamental analysis really to establish our directional bias not technical analysis Technical analysis since our supply and demand strategies are used to really just time our trade entries identify risk management opportunities and establish profit targets and seeing really where Value is on a price chart whether a binary potentially expensive or a bargain area, right? So that's the trading 180 way and let's get into the week ahead and when it comes to some of the news that is going to be going on a lot of central bank news so the Fed US Federal Reserve Bank the European Central Bank Bank of England and Bank of Japan pretty much the major central banks will be meeting to discuss Monetary policy next week and we're going to get into that in a bit more detail With investors eager to hear if policy makers will be updating forward guidance and mid concerns over the Omicron variant and mounting inflationary pressures, right? so central banks at the moment RNA interest rate hiking cycle well some of them are and But they can't necessarily hike because obviously of high inflation They can't necessarily hike because they Really have to have the economy grow as well. And if the Omicron variant is causing lockdowns then Hiking becomes a bit more difficult even in the face of higher Inflation, but let's get into that anyways and we'll start off on the dollar Index and the dollar index is a measure of a dollar strength against the major currencies like the euro the end the pound as well so Looking at this really kind of starting off fundamentally and giving again a bit of an overview And we'll start off more on the risk sentiment before we get into kind of the dollar fundamentals and you know two weeks into the Omicron outbreak and where are we Where to from here? I should say so the pathogen the main I guess takeaways is the pathogen is spreading fast But seems to cause only a mild disease which is you know really important and the Omicron variant efficacy lower, but boosters Appear to help so there is some positive news out of you know with regards to the Omicron variant It's not necessarily as bad as First thought even though things could obviously deteriorate from here. Nobody truly knows but the positive there are positive signs Right, so the reason why that's important is because then Countries are probably less likely to go into any kind of severe lockdown which may hurt, you know economic growth and We can potentially get you know move forward and economies can kind of get to growth If they can contain the Omicron variant and there is obviously another I say obviously, but there is another Bloomberg article Pfizer Course has 23% efficacy versus Omicron in South Africa study So immunity is still likely strong enough to curb severe disease So I'll just scroll down to the bottom as well and it says preliminary UK data released on Friday showed that boosters from AstraZeneca PLC and Pfizer BioNTech SE improved protection against the Omicron variant variant To as much as 75% in the early days after the shot. So again, just some positive news really from a resentment perspective looking at the the fundamentals and really fundamental analysis is really to do with the study or Fundamental analysis when it comes to forex anyway is the study of what what gives that forex exchange rate its value, right and The things that we focus on at trading 180 is is a central bank monetary policy, which is driven by which is driven by inflation and GDP and Ultimately what we were looking for to give a currency is value is central banks Again, monetary policy and the currencies are I guess the banks that are looking to high crates first Yeah, I'm looking to appreciate their currency are really the ones that we look to buy Versus the currencies that are not doing the same or basically lagging so for 2021 to 2023 end of 2023 fourth quarter If we look at the Federal Reserve ING Bank at Dutch Bank think that tapering obviously Is coming tapering ends in the second quarter of 2022 with the first rate hike potentially coming in the third and fourth quarters, right? So you compare that to for example the central European Central Bank. They're not looking to potentially High crates or the IMG Bank don't think they're going to high crates until the first quarter of 2023 If all obviously goes according to plan, but the the countries and the currencies that Thought to hike first should be the ones to potentially buy now There's obviously caveats to this meaning that things can change right things do change things can change and we're getting to for example The Bank of England as well a bit later But as a rule of thumb, you really want to look towards banks that are hiking rates first against central banks that are looking to hold or even cut rates. So moving on to the dollar and Actually matter of fact, so this is a an article where we talk about 20 Central banks hold meetings as inflation forces split and again, it's just understanding that there's lots of Central bank meetings to Fed the Bank of England the ECB and the Bank of Japan as we've seen Are looking to potentially tighten not all of them obviously there are different Paths at the moment, but in general Inflation is a worry, right? So the Fed is expected to taper support while others are still easing again There's that divergence in the Bank of England hiking hints Undermined by Omicron and reason wise because we'll get into it is we had the latest GDP data from the from from the UK Which wasn't great and as I say in order to hike rates You need the economy to be able to support a great hike anyways Fed is Seen on track to quicken taper after the latest inflation print. So tapering is again the first stages of appreciating a currency and Not depreciating the currency So they look not looking to buy government bonds. They're looking to reduce the amount of government bonds. They they buy and Which is again positive and if they're tapering quicker, then that should mean a positive Move I'm not saying it's gonna happen this week. No one knows exactly when it's gonna happen But in the medium to long term, this is the the path, right? So Understanding this and going back to the dollar index. We should see, you know the path at least resistance to the upside Right, that's what should happen now. I'm not saying again. I'm not saying that it's gonna go this week It's gonna go higher. It's not how you know prices work, right? There's there's there's liquidity that needs to be gathered and there's profit taking towards the end of the year because this is probably the last Or this is the last week of trading really major trading by the institutions and Everything else after this week is gonna be really quiet. So Although maybe in the next few months prices may, you know, the value of the dollar may go higher in the next Sorry, maybe week or two We could see, you know profit taking prices come down to an area of value right where That is seen more of as a bargain to buy the dollar than say somewhere like now, right? So So again my path for these resistance or my my bias is to the to a dollar long trade still And just waiting for really prices to come down to certain areas before looking to get obviously Long on not necessarily the dollar index, but other dollar Crosses so Again, if anything changes again, we use this as really just confluence and Understanding from the from evaluation of the dollar. This is definitely an expensive area for now This is seen as a bit of a bargain area because you can see there's buyers there So for now, I think the dollar is in a bit of no man's land and let's see what happens in the you know The coming week or coming weeks if there's really no movement This weekend is pretty gonna be no surprises as the news has been priced in I think not a prediction But I would assume that probably some profit taken on the dollar will occur Until into the next year and we could see the dollar start to pull back and then into an into a nice Zone a nice price, maybe the 95s Even better would be the 98 95 round number and then at the start of the year We could see some more dollar buying again This is all dependent upon the economy and the Omicron variant and how bad or how good it it is So moving on to the dollar yen And the dollar yen this area here this 112 60 area has held right from this demand zone here and Again, I would expect prices to you know go higher, but again in the short term Nobody knows right. No one knows what's gonna happen Day-to-day or even week-to-week, but you think in the next few months with you know the the fact that you've got The Japanese yen and the Bank of Japan are really not looking to high-grades anytime soon They're well behind the curve You would think that prices are going you know to go with exchange rates gonna go to the upside But again if risk off right if risk off prevails meaning that there's more uncertainty in doubt The Japanese yen is a safe haven currency or tends to react to safe haven currency and you could see Prices actually go to the downside, but risk is when once risk comes back on and once you know vaccines start to Work against the Omicron variant because that's that that is the light at the end of the tunnel, right? We are you know the defies is in the pharmaceuticals of the world are looking to You know create a vaccine that helps against that then you will see Prices eventually, you know go to the upside So again My bias is to the upside but just looking at you know really kind of levels to see Where where we want to go from there? So any kind of buy trades in this wall, you know 112 or even the 111s would be even better for me That's what I'm looking at moving on to the dollar Swiss dollar Swiss again. We did have in fact a nice Some demand here, so we've definitely found Buying activity in around here So this 91 60 to 92 areas of prices do start to come back down into that area there I think that's a nice buy and a decent buyers Well, not necessarily convinced on this level because it has been touched once twice three times So I think if I was looking to get long on this it have to be definitely at that 0.91 round number that area there also represents a bit of a capture pain relief zone So on an intraday chart so that I think that's quite nice If prices do come down there for a nice little bargain again If you're looking at looking to sell this currency pair in a risk-off environment if things start to get worse for now I think that the top area of this area would obviously be a Bit of a supply zone not the strongest area of supply and not yet not by our criteria Because it really hasn't made lower highs and lower lows yet But there is some supply I guess on the would be supply on the on the lower time frames But from a daily perspective, it's not really the strongest area of supply at the moment Moving on to the dollar CAD and the Canadian dollar this week as risk came back on the commodity currencies Canadian dollar did start to strengthen oil, you know went higher in price a bit and But fundamentally this pair isn't something that I'm really interested in But it did create in fact a decent supplies and surprise surprises basically came up to this Literally pinged off of that one point eight. Sorry two eight four level and reverse from there And then we have created another Supply zone right there So in fact, this is now seen as a bit of an expensive area or a bargain area depending on which one you want to be a buyer and seller of in a risk-on environment Personally, you probably want to look for towards the Canadian dollar as they are looking to high crates first So if all things are, you know start to become good then that is a decent area My only concern would be the fact that the level has been touched several times So I'm not really too keen on that technically look the best area technically to look for To look for short trades, but again, it depends on which way you want to be a buyer or seller as you've seen This week prices did pretty much react or kind of held on Between these demand zones right there and right there. I will get rid of this one right here and Again, I would probably say any pullbacks into this zone if you want to be a buyer of the US dollar And that is where you're looking for the one two six round numbers where you're looking for any kind of Buy trades, but for me, it's not really a pair. I'm interested in at the moment pound dollar And the pound dollar The pound should be really the one that maybe would be strengthening When it comes to monetary policy as they are looking to potentially high crates first But we did have this week the UK economy Barely grew in October the third quarter as shortages hit builders so construction declines From September and manufacturing stored and outlook for the end of the quarter bleaker with new COVID restrictions so the the economy is losing a bit of momentum at the moment and So that puts really, you know a bit of pressure on the Bank of England because even though the Bank of England are looking to potentially hike rates next week The market is pretty much saying that they don't believe that they will and to hike especially during during the Christmas period is Isn't something that is really advised. I think it's it's they've earned the Bank of England They've only hiked rates once in the past maybe 40 years or something like that anyway So I don't think that's really going to be happening anytime soon But and also as well in a bit of a risk-off environment You've got the dollar should be the one to actually strengthen so that I think is a decent zone especially because it's got It's got some a bit of support and resistance within that zone there as well. So that looks That looks very good technically. I think Lots of lots of confluence in that zone and I think if I was to be a buyer or a seller of this currency pair, again my my Bias would be to the short side. So any pullbacks into I think this area here this 1337 to 1332 Is a decent Cell we do have some other supply zones in there the 133 round number Let me just zoom out a little bit. Yeah, nothing has localized Supply there, but I think overall let me just get rid of some of these Make the chart a bit messy But I do think we've got Yeah decent zone around that 1335 area Moving on to the euro dollar and the euro dollar We've now again entered into a bit of a range putting towards the end of the year Where prices are kind of between this high and this low, right? Prices go from trending to ranging and I guess the The correct term for it is really just a An auction right a fair auction where you've got buyers and sellers. This is obviously An expensive area or a bargain area depending on which way you're looking at it And this is obviously the same thing bargain area for the euro or an expensive area for the dollar, right? So Again at the moment, I think with profit taking going on Will we see much movement this week? Who knows unless there's probably any surprises But everything's pretty much being factored in I think or priced in To the market. So I can't see really any major moves this week But again, who knows, right? I'm not here to necessarily predict what price is going to do in the short term But I know probably from a definite from a long-term perspective You know any pullbacks for me any pullbacks are shorting opportunities. So prices, you know come up to this this area of this Supply zone or even better still this supply zone here for me I am a shorter reason being is because again the Fed not only are ahead of the ECB from a From a monetary policy perspective Even from a risk perspective an omicron Europe are struggling more than I think the US are and the ECB stimulus exit plan emerges with inflation at record pace But again, there's there's inflation is at record pace pretty much everywhere So there's nothing new but economists see an end to bond buying in 2023 according to a poll and officials expect to boost regular Purchases in the short term now Economist see an end to bond buying in 2023 in with the Fed They're expecting that to be this year. We're also yesterday this year or shortly next year in 2022. So again the By all measures the US are ahead of the of of Europe So so from that perspective if we're looking at the charts you would still consider Prices going down to at least a 110s and I've seen some essential some some bank forecasts that actually predict The 110 right so that could be a potential target within the next Quarter or two. So any again any pullbacks into Some supply zones for me are shorting opportunities, although I probably won't be trading anything Or opening up any new positions over the Christmas period after this week I think that's pretty much going to be meat done for the year after this week. I'm not going to enter into any new positions Until probably 2022 so There are obviously buying opportunities if if you know things start to turn around for Europe or things start to deteriorate In the US then this 112 round number And this zone should be a decent area to look for any kind of buy trades Moving on to the Aussie dollar and the Aussie dollar again benefited from some risk on sentiment This week and again nice bounced off of that demand zone right there really really accurate Um, and then we've kind of again halted here or paused here For a little bit and this supply zone. So let's see what happens again I think probably towards the the end of the year. We should probably maybe start to potentially range Before the market decides on what it really wants to do the Australian dollar are again behind the curve The rba are not looking to high crates anytime soon, although there are rumors of them potentially looking to implement some sort of Tapering within the next at the next meeting. So who knows but for now, I think again with the US dollar being ahead of the Australian dollar in terms of monetary policy any moves back to these demands, Australia's supply zones should be Shorting opportunities, but in a risk on environment I think the the Australian dollar has a lot more room to grow to the upside But I think while we're still in this uncertain point And until the rba do start to Announce some sort of tapering and rate hikes. I think the the the US dollar is the one to buy And moving on to gold finally gold has been a bit of a surprise really when it when it comes to price movement You know the uncertainty around the omicron variant and as well as you know high inflation I would have assumed that gold would have you know been Making its moves higher, but it hasn't really reacted in fact So again, I'll say reacted but it's gone into I guess What the markets think are a bit of a fair value auction So obviously the the market thinks that over the last week or two that the gold is valued between 1762 and 1790. So Here we are still buying opportunities obviously, but not necessarily being driven to price discovery. So Again, this area here This 176 area is a level that has been touched You know several times So be very very careful with prices do come down because probably expect something like that to happen Um with the dollar again, I think probably being the stronger And the expectation for uh rate hikes And I guess rate hikes would give a return right if if the dollar is returning going from maybe 0.25 percent To potentially zero point You know 5 percent depending on how you know the hike as a as a percentage Then you'll probably have You'll probably have money flowing into The dollar and potentially out of gold because gold doesn't pay really an interest rate, right? And you know into government bonds as well and in potential yields But again, it's a bit of a difficult one to to tell at the moment again I would have expected gold to at least have had a reaction to to the inflation As well as the omicron variant, but if you are looking to buy gold I think probably a fresher area of demand the 17 50s would be the probably the better area Of course, I would say the ultimate cheap area at the moment If you're looking at this being an absolute high and an absolute low would be the of the range would be definitely around these 1680s would be the really the one and if we are taking that That low to that high And you're looking at fair value potentially uh All right fair value gold is probably just below fair value So if you and if you think that gold is cheap, then um, yeah, we are definitely below that fair value Area so anything below 50 of the range if that's expensive and that's cheap That's a bargain. This is fair value So anything around anything that goes below that is going to be seen as more of a bargain area, but um, I think uh For now gold isn't probably going to maintain its It's its area around here. I think again between probably this this 18 15s and probably this 17 61 probably for now I guess unless there things got to get better or worse, right? There's got to be a catalyst for price movement But for now it doesn't seem like there is anyways Especially if you guys have come towards the end of the year But again just a quick word of warning that once um liquidity does dry up a little bit The market is easier to push prices are easier to push in certain directions in the market will seek out your stop losses. So um You know not say not any kind of financial advice, but just be aware of any, you know major swings or any major manipulations in the market um You know on on low, um low liquidity Trading over the christmas period after this week anyways guys, that's it And uh, hope you enjoyed the the analysis take care and speak to you all soon